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The Diversification Mirage Inside Today’s Indexes

Indexes are increasingly dominated by a handful of AI‑focused mega‑cap firms, turning passive funds into de‑facto concentrated bets. Peter Corey of Pave warns that investors often mistake broad ETF holdings for true diversification, while underlying exposure remains clustered around the same technology drivers. The firm’s analytics platform evaluates dozens of risk and return factors to surface hidden concentrations and adjust weights deliberately. As AI moves toward commoditization, the gap between expectations and actual returns could trigger sharp market corrections.